What is Web3? The idea of an internet owned by users

Web3 is the idea of an internet where people own their accounts, money and digital goods directly, recorded on blockchains, instead of keeping them on platforms run by a few large companies. It is less a technology than a proposal for what should come after the web of social media and app stores. What it means in practice is wallets, tokens and apps whose rules run as code on a shared ledger.

In short

• Web3 is pitched as the third stage of the web: read (Web1), read and write (Web2), and read, write and own (Web3).
• Its building blocks are blockchains, crypto wallets that hold your keys, and tokens that record who owns what.
• Critics point out that much of it still runs through a few companies, and that scams and clumsy design have kept most people away.

Where does the name come from?

The word was coined by Gavin Wood, a co-founder of Ethereum, in an April 2014 post called ĐApps: What Web 3.0 Looks Like. His aim was to rebuild the things people already used the web for so that the rules were enforced by cryptography rather than by trusting an organization. The word sat mostly inside the crypto world until 2021, when it became a marketing term for cryptocurrency, NFTs and the startups built around them.

It is easy to confuse with "Web 3.0" in an older sense, the semantic web that the web's inventor, Tim Berners-Lee, and others described in the 2000s, in which pages carry data machines can understand. The two ideas share a number and little else.

How is Web3 different from Web1 and Web2?

The usual story divides the web into three eras. The dates are rough, and the labels were applied after the fact. The web itself has stayed the same set of pages and links throughout; what changed is who makes the content and who controls it.

	Web1	Web2	Web3
Rough years	1990s to early 2000s	Mid-2000s on	Proposed since 2014
What users do	Read pages	Read, post and share	Read, post, and own
Who holds the data	Whoever runs the site	The platform	A public blockchain, in principle
How you log in	Mostly you don't	A username and password the platform keeps	A [[what-is-a-crypto-wallet
How money moves	Card forms, if at all	Card networks and payment companies	Crypto tokens, sent directly
Who can shut you out	The site's owner	The platform	Nobody, for what's on the chain; the app or website still can

That summary follows the way the Ethereum Foundation describes it: Web2 made the web read-write, but a handful of companies came to control most of the traffic and the value users created, and Web3 adds ownership.

What does "owning" something on Web3 actually mean?

A concrete case shows both the promise and the catch. Say you buy a sword in an online game.

In a Web2 game, the sword is a row in the game company's database. If the company bans your account or shuts the game, the sword is gone, and you can't sell it outside the game unless the company allows it.

In a Web3 game, the sword is a token on a blockchain, sitting at an address your wallet controls. The company can't take it back, and you can sell it on any marketplace that reads that blockchain. That is the "own" in read-write-own.

The catch is what the token actually is. Usually it records a token number and a link to a file, the picture or the stats of the sword, kept on an ordinary server. You own the entry in the ledger; the game decides what that entry means. If the game closes, you still own the token, but nothing may use it. In January 2022 the cryptographer Moxie Marlinspike showed this with an NFT he made that displayed one image on one marketplace and a different one on another, because the token only pointed at a web address he controlled.

What are the main criticisms?

The sharpest is that Web3 recentralizes. Marlinspike's central observation was that people do not want to run their own servers, so most Web3 apps reach the blockchain through a few companies that run its nodes for them, and most wallets rely on the same few services. In his words, once a distributed system centralizes around a platform for convenience, "it becomes the worst of both worlds". Ownership of tokens is also concentrated: early investors and founders often hold large shares of a project's supply.

The second is fraud and theft. With payments that can't be reversed and code that anyone can deploy, hacks of decentralized finance apps, fake projects and outright scams have been common. The researcher Molly White's site Web3 Is Going Just Great catalogs them, one entry at a time.

The third is usability. Holding your own keys means losing them loses everything, transaction fees rise when networks are busy, and the steps are unfamiliar. Even the Ethereum Foundation's own page lists cost, user experience and a reliance on centralized services among Web3's current limits.

Still argued

Supporters say Web3 is early, that the plumbing is improving, and that the parts that work, such as Bitcoin payments, stablecoins and wallets that let you log in without handing over an email address, show real value. Critics say most of the activity is speculation, and that the parts people use end up run by companies much like Web2's. Both sides can point to evidence. Whether Web3 becomes a layer of the ordinary web, stays a niche, or fades is open; this note explains the idea and takes no side.

What is left of Web3 today?

The word spread with the 2021 boom in crypto and NFTs. In 2022 crypto prices fell sharply and several large firms, among them the exchange FTX, collapsed. The pieces the word named have stayed: blockchains that run programs, wallets as logins, tokens as records of ownership, and dollar stablecoins moving across them. Whether those add up to a new web or a new set of financial tools depends on who is asked.

Check yourself

• Without looking back, explain what "read, write, own" means, with one example for each.
• When someone owns an NFT, what exactly is recorded on the blockchain, and what isn't?
• Why do critics say Web3 apps often end up centralized anyway?

Sources

• ĐApps: What Web 3.0 Looks Like — Gavin Wood, 2014
• What is Web3 and why is it important? — Ethereum Foundation, ethereum.org
• My first impressions of web3 — Moxie Marlinspike, 2022
• Web3 Is Going Just Great — Molly White
• Web2 vs Web3 — Ethereum Foundation, ethereum.org